New Jersey Real Estate Report

From the Record:

‘A seller’s market’: Here’s where home prices are soaring in NJ even as the pandemic fades

On the hunt for a home last summer, Priscilla Gabela and her husband, Antonio Aluotto, gave up after a month. Bidding wars were everywhere, and the North Arlington couple decided to wait things out, taking a break from September through December. 

When they reentered the market early this year, they were in for sticker shock. If prices were too lofty in 2020, this year they zoomed into the stratosphere. 

“It’s been crazy,” Gabela said. “We’ve seen a lot of houses priced really high.”

Welcome to the post-pandemic North Jersey real estate market, where price appreciation is the brutal reality even with vaccines spreading, interest rates climbing and more homes going on sale. With demand still high, last year’s “COVID premium” isn’t fading away. 

In Bergen County, the median home sale price in Tenafly jumped 16% this May compared with a year earlier. Hackensack’s rose 19%, and Teaneck saw a whopping 33%, according to data from the state realtors’ association and individual agencies. 

Some axioms of North Jersey housing held true: Towns with quaint, walkable downtowns or easy access to NJ Transit fared well — Montclair prices leaped 22%.

But some of the sharpest increases occurred farther to the west, as the trend toward hybrid and online work schedules encouraged buyers to settle farther from New York. Morris County’s median price surged by $100,000, or 23%, in April, the latest month available. Sussex County soared as well, led by Sparta’s 23% increase.  

“Sellers are taking advantage of escalating prices and buyers are feverishly absorbing the inventory — it’s still very much a seller’s market,” said Max Stokes, a real estate associate at Christie’s International Real Estate Northern New Jersey in Ho-Ho-Kus.

From CNN:

The housing market is on fire. The Fed keeps adding gasoline

Bidding wars. All-cash offers. Homes selling for $1 million over asking. The housing boom has officially reached the ridiculous stage.

Despite surging home prices that are rising at the fastest pace on record, the Federal Reserve continues to prop up the housing market by purchasing $40 billion of mortgage bonds each month.

And while the Fed is finally “talking about talking about” removing some of its support, some fear the US central bank is creating another housing bubble as it deliberates.

That’s because the Fed’s emergency strategy is artificially lowering the cost of mortgages, and further boosting prices that already looked stretched in many markets.

“The Fed just continues to pour more gasoline on that fire,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.

Of course, the central bank certainly deserves credit for its historic efforts to prevent the Covid recession from morphing into an all-out depression.

…

“House prices are exploding right now. Everything in the housing sector is going up in price,” Jason Furman, a former top economic adviser in the Obama administration, told CNN’s Poppy Harlow. “It probably isn’t the case that the Fed should be continuing to artificially hold mortgage rates down.”

Danielle DiMartino Booth, a former Fed official, agreed that the most obvious starting point for the Fed to begin to remove stimulus is on the mortgage front. “Ultra-low mortgage rates have helped feed a frenzy in housing,” said Booth, who is now CEO and chief strategist at Quill Intelligence.

From NJ101.5:

NJ adds 13,600 jobs in May – but still down 314,000 in pandemic

New Jersey’s economy added 13,600 jobs in May but still hasn’t recovered 44% of the jobs that disappeared last March and April when pandemic-related shutdowns were imposed.

Last March and April, the number of jobs in New Jersey plunged by 717,200, nearly 17%. It has gained jobs every month since then except one, adding 403,000 positions in total – but still remaining 314,200 short of the pre-pandemic peak.

At the rate jobs have been added so far in 2021, it would take until the end of 2023 for the economy to recover its pandemic losses.

But next month’s report could look different. The state Department of Labor and Workforce Development noted that the survey took place before pandemic-related restrictions on New Jersey businesses were lifted in late May, so any impact on jobs would become evident next report, issued July 15.

Leisure and hospitality businesses added 6,200 jobs, followed by 3,000 more trade, transportation and utilities jobs and 2,500 more jobs in education and health services. Seven of nine sectors gained jobs, but losses were recorded in construction of 2,200 and financial activities of 400.

Updated Vaccination by Age Range for NJ:
6/8 vs 6/14

At Least 1 Dose
Total Pop: 9.2m 
Total 1st Doses: 5.1m – 55% of total pop (Up from 54%) – Bloomberg reporting 62.6%

12-15 – 450k population – 102k dosed – 23% 1 Dose (Up from 22%)
16-17 – 240k population – 102k dosed – 43% 1 Dose (Up from 42%)
18-29 – 1.5m population – 714k dosed – 48% 1 Dose (Up from 43%)
30-49 – 2.4m population – 1.48m dosed – 62% 1 Dose (Up from 60%)
50-64 – 2m population – 1.43m dosed – 72% 1 Dose (Up from 70%)
65-79 – 1.1m population – 1.0m dosed – 91% 1 Dose (Flat at 91%) 
80+ – 415k population – 306k dosed – 73% 1 Dose (Down from 77%) – Rounding issues?

From NorthJersey.com:

As NJ inches toward vaccination goal, don’t expect COVID-19 to disappear, experts say

A day before New Jersey launched its COVID-19 vaccination campaign in December, Gov. Phil Murphy drew an epidemiologic line in the sand.

He announced that at least 70% of adults, or about 4.7 million residents, would need to be fully vaccinated for the state to reach herd immunity — the nirvana of infection control in which a virus can no longer find enough hosts and fades away.

Seven months later, New Jersey is still inching toward that goal — more than 4.5 million were fully vaccinated as of Sunday — but the consensus now among many health experts is that herd immunity is unlikely in the foreseeable future.

Vaccine hesitancy among a significant portion of the population, the ability of the virus to mutate into more contagious variants and vaccine distribution problems across the globe are among the many reasons why the threshold for herd immunity may be much greater than the initial 70% goals set in New Jersey and the U.S.

“I think we’ve come to reckon that COVID will be around a lot longer, which means we’ll have to devise strategies to manage it,” said Jason Diaz, a professor of virology and molecular biology at LaSalle University in Philadelphia.

From News 12:

NJ has billions of extra revenue; Republicans accuse Murphy administration of keeping them in the dark

After years of scrounging for funding at budget time, New Jersey lawmakers say that the state now has more money than they know what to do with. And with just three weeks go to before the state budget deadline, Republicans say that the Murphy administration is cutting them out of choices on how to use the $4 billion tax windfall.

“It’s unprecedented. The whole time I’ve been here, we’ve been dealing with shortfalls,” says Republican state Sen. Declan O’Scanlon.

Since Gov. Phil Murphy’s budget message in February, the state has found itself with an extra $4 billion than it planned for, as the economy roars back from the pandemic.

“We have a lot more money than we anticipated and it’s time to give it back to the taxpayers,” says Republican state Sen. Sam Thompson.Republicans on Thursday demanded the Murphy administration include them in talks about where the money should go before the final budget is signed on June 30.

“We’ve been essentially shut out, left in the dark,” says Republican state Sen. Mike Testa.

Updated Vaccination by Age Range for NJ:
5/13 vs 6/8

At Least 1 Dose
Total Pop: 9.2m 
Total 1st Doses: 5m – 54% of total pop (Up from 49%) – Bloomberg reporting 61.5%

12-15 – 450k population – 100k dosed – 22% 1 Dose (Up from 0%)
16-17 – 240k population – 100k dosed – 42% 1 Dose (Up from 19%)
18-29 – 1.5m population – 650k dosed – 43% 1 Dose (Up from 33%)
30-49 – 2.4m population – 1.45m dosed – 60% 1 Dose (Up from 50%)
50-64 – 2m population – 1.4m dosed – 70% 1 Dose (Up from 65%)
65-79 – 1.1m population – 1.0m dosed – 91% 1 Dose (Flat at 91%) 
80+ – 415k population – 320k dosed – 77% 1 Dose (Down from 87%) – Rounding issues?

From the Star Ledger:

If almost 20% of N.J. adults don’t get vaccinated, will the state achieve herd immunity?

In a Rutgers-Eagleton poll released Thursday, 17% of New Jersey adults said they will not get the COVID vaccine.

Nearly half of all parents polled said they have concerns about the vaccine for their children.

As of Friday morning, about 57% of adults in the state have been fully vaccinated, according to state data. The state has set a goal of having 70% of New Jersey’s 6.9 million adult residents vaccinated by the end of June.

But if 17% of adults say they won’t get inoculated and nearly half of parents aren’t sure, will the state reach herd immunity,which is defined as having a large portion of the population immune to a disease either through vaccination or natural infection?

It’s not a simple question, medical experts said.

…

Stephanie Silvera, an infectious disease expert and professor at Montclair State University, said herd immunity isn’t an on/off switch, but more of a dimmer.

“The higher percentage of the population that is vaccinated, the lower the probability that someone who is infected will come in contact with someone who is vulnerable,” she said.

She said if another 10% of the adult population that isn’t vaccinated decides to get the vaccine, and if more parents have their children vaccinated, that gets us closer to herd immunity.

“The challenge will be making sure that parents feel safe and comfortable getting their children vaccinated and this will likely require outreach and listening to their concerns so that they can be addressed,” she said.

Johri said the poll’s findings about parents — 43% said they will wait to see how the vaccines work out before getting their child inoculated, 4% said they were not sure, and 53% said they will get their child vaccinated right away — is actually heartening, especially when you take into account the margin of error.

From NJ1015:

Most small businesses across NJ and the U.S. continue to struggle to fill job openings

Nearly half of small business owners could not fill job openings last May, according to The National Federation of Independent Business’ monthly jobs report. That is a record high. In fact, May marks the fourth consecutive month of record-high readings for unfilled job openings.

Small business owners are doing everything they can to get workers back on their payrolls. NFIB Chief Economist Bill Dunkelberg says owners are offering higher salaries but in the end, higher labor costs are being passed on to the consumers in higher selling prices.

As the summer tourist season gets under way, there’s a fear that small businesses won’t be able to open at full capacity because there’s just not enough workers.

“Perhaps it’s time for Governor Murphy to offer bonuses for those returning to work instead of the $300 additional unemployment subsidy,” said Eileen Kean, NFIB New Jersey state director.

From CNBC:

Housing boom may be cooling as weekly mortgage demand drops again

High prices and low supply are finally taking some of the heat out of the housing market.

Even with interest rates falling slightly, mortgage application volume fell 4% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. It fell to the lowest level since February 2020.

Applications for a mortgage to purchase a home fell 3% for the week and were 2% lower than a year ago. This is the second straight week that purchase demand was lower than a year earlier, even though mortgage rates are still lower.

Pending home sales, which are counted by signed contracts and are therefore an indicator of future closed sales, dropped a wider-than-expected 4.4% in April, according to the National Association of Realtors.

Buyers are clearly starting to hit an affordability wall. This is especially clear from the government loan demand. FHA and VA loans offer low or even no down payment options for borrowers with lower incomes and credit scores.

“Tight housing inventory, obstacles to a faster rate of new construction, and rapidly rising home prices continues to hold back purchase activity,” said Joel Kan, an MBA economist. “The government purchase index declined to its lowest level in over a year and has now decreased year over year for five straight weeks.”

From NJ101.5:

NJ children are testing how well Pfizer’s COVID vaccine works

One of the main reasons why Gov. Phil Murphy has ordered children to wear masks at summer camps and when school begins in the fall is because no COVID vaccine has been given emergency use authorization for kids under the age of 12.

That could soon change.

Pfizer, in partnership with the German drug maker BioNTech, has started clinical trials testing its COVID-19 vaccine on healthy children between the ages of six months and 11 years old. Part of the trial is taking place at Rutgers University.

A total of 200 Garden State kids are participating, including 100 of them between the ages of 5 and 11.

Two additional groups of children, 50 between the ages of 2 and 5, and 50 between 6 months and 2 years are also enrolled in the trial.

From the WSJ:

Full-Time Residents Flock to Jersey Shore 

Nearly a decade after superstorm Sandy ravaged the Jersey Shore, economic development is thriving as the Covid-19 pandemic led to a wave of people moving to coastal communities full time.

On a recent afternoon, Seaside Heights, one of several towns that dot the New Jersey shoreline, was bustling with construction activity, as new condos and single-family homes go up. Along the boardwalk, new restaurants are opening up ahead of the busy summer season. A new luxury pool and cabana club is being built. On Boulevard, one of the main thoroughfares, a number of lots are under development or in the planning stages that will feature condos and ground-level retail shops, said Mayor Anthony Vaz.

Ocean County, N.J., where Seaside Heights is located, is one of many counties across the U.S. that has benefited from a surge of migration during the Covid-19 pandemic, as people relocated from crowded urban locations to less densely populated regions, according to a Wall Street Journal analysis of U.S. Postal Service permanent change-of-address data through 2020. Ocean County had a net gain of 7,000 households in 2020, mainly from people relocating from New York City and northern New Jersey, a 40% increase from the prior year, according to the data.

The Jersey Shore has been known as a vacation destination that swells during the summer with tourists and people visiting their second homes. But now more people are taking advantage of remote work options and are making the region their full-time residence, said Gary Quinn, director of the Ocean County Board of Commissioners.

That population growth supercharged the county’s economic development, raising the tax base by $3.3 billion to $110 billion in 2020, its highest mark since Sandy wiped out swaths of the community in 2012, said Mr. Quinn.

From ROI-NJ:

N.J. is reopening. We must now work together to rebuild the economy

For months, the New Jersey Chamber of Commerce and the state’s business community have been urging Gov. Phil Murphy to reopen the state, where justified by the medical metrics, and let the flow of commerce help rebuild our economy.

Now that we are on the verge of a full reopening, we should remember there are still significant issues to address before this race is won.

If the business community walks in partnership with state government and we move together in a timely fashion, we can effectively address these remaining issues, and New Jersey can look forward to a robust and vigorous recovery.

The first thing that the state and business community must work together on is to instill confidence in workers and customers that it is safe to once again visit stores, offices, restaurants and other places of commerce.

It is incumbent on businesses to do their part by reminding employees what the medical data clearly show — that the COVID-19 vaccine is safe and effective. Businesses must vigorously encourage employees to get vaccinated and, whenever possible, allow their employees the time they need to get themselves and their families vaccinated.

The faster we approach community protection (aka herd immunity), the sooner our economy shifts into high gear. The business community can and must play a significant role in getting our economy back to where it needs to be.

We now know that New Jersey’s revenue picture is considerably brighter than originally anticipated. One reason for that is higher-than-anticipated tax revenue. Another is an infusion of financial support from the federal government.

State Treasurer Elizabeth Maher Muoio revealed Thursday that the feds deposited more than $6 billion — New Jersey’s share of the American Rescue Plan funds — into our coffers last week.

While revealing this news, the treasurer said one disconcerting thing: The federal government sent preliminary guidance about how the money should be spent and gave New Jersey officials 60 days to review and respond to these guidelines.

That will not work!

From the Star Ledger:

Live in N.J.? You’ll pay more in taxes over a lifetime than anywhere else, study says

Live in New Jersey? It will cost you.

New Jerseyans will pay an average of $931,698 in taxes over their lifetimes, more than residents of any other state, according to a study by Self, a financial technology company. That’s almost half of a taxpayer’s lifetime earnings of $1.9 million.

Much of that is due to New Jersey’s property taxes, which at an average of more than $9,000 are the highest in the country. New Jersey ranked third in taxes on earnings, 18th in sales taxes and 43rd in levies on motor vehicles.

West Virginians shouldered the country’s smallest tax burden, $321,023. or one-quarter of their average income of $1.3 million.

The high taxes in New Jersey and elsewhere illustrate why those states were hardest hit by the Republican tax law’s $10,000 cap on deducting state and local taxes, known as SALT.

From CNBC:

April existing home sales drop, marking three straight months of declines

Sales of existing homes dropped 2.7% in April from March to a seasonally adjusted annualized rate of 5.85 million units, according to the National Association of Realtors.

It was the third straight month of declines, the group said.

Sales were 33.9% higher than April 2020, but that comparison is an anomaly because the housing market and economy shut down at the start of the pandemic. Housing then rebounded strongly last summer. Sales were still 11% stronger than April 2019.

“I would say it is hot, that is the one word description even with the sales decline,” said Lawrence Yun, chief economist for the Realtors. For every listing there are 5.1 offers. Half of the homes are being sold above list price.”

The supply of homes for sale at the end of April was down 20%. There were 1.16 million homes for sale, representing a 2.4-month supply at the current sales pace.

High demand and rock-bottom supply continued to push prices higher. The median price of an existing home sold in April was $341,600, an increase of 19.1% from April 2020. That is both the highest median price on record and the largest annual increase on record.

Much of that large increase in the median price is due to the mix of homes that are selling. There is far more activity on the higher end of the market, where supply is more plentiful, and very little activity on the low end, where the shortage is most severe.

From CNBC:

Homebuyers are applying for ever bigger mortgages as home prices soar

Sky-high home prices mean demand for ever bigger mortgages, but those prices may also be causing a pullback in homebuying overall.

Mortgage applications to purchase a home fell 4% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was just 2% higher than the same week one year ago, when the housing market was just starting to come back after the pandemic shut it down.

“A decline in purchase applications was seen for both conventional and government loans,” said Joel Kan, an MBA economist. “There continues to be strong demand for buying a home, but persistent supply shortages are constraining purchase activity, and building material shortages and higher costs are making it more difficult to increase supply.”

The extreme shortage has prices continuing to climb at the fastest pace in over 15 years, and as a result, average purchase loan balances are climbing in tandem. Last week, that average hit $411,400 — the highest since February.